- Up the frequency Depending on your loan type and lender, by paying a loan fortnightly or weekly rather than monthly you may save thousands of dollars in interest. This is because there are 12 calendar months and 26 fortnights in a year. If you pay fortnightly, you may actually make the equivalent of thirteen monthly repayments each year.
- Just a little bit more Paying a little extra every month can have a big impact in the long run. Consider rounding up to the nearest $10, $50 or $100, or avoiding the temptation to drop your repayments in line with interest rate changes. Based on a loan of $300,000 at 5.85% over 30 years, if you round the monthly repayments of $1,770 up to $1,800, the loan will be repaid approximately 10 months earlier and will put over $17,000 extra in your pocket. Making a lump sum payment (big or small) into a loan can also make a substantial difference. Say a borrower received a bonus of $900. When deposited into the above-mentioned loan, it would reduce the overall term by 2½ months and the total repayments by almost $4,278.
- Feeling a little, off… set? Loan accounts such as a 100% off-set account enable consumers to link a savings account with their home loan account and ‘off-set’ or use that amount to reduce the interest accumulated on their mortgage. For example, if a borrower has $5,000 in a full offset account, then on the above-mentioned loan the term would be reduced by one year and the borrower would save over $22,879. Note that some lenders offer partial offset only.
- Take everything with you when you move If you are likely to move home and want to take your mortgage with you, make sure your lender will allow the transfer of your loan to another property and not charge the earth to do it! If your loan isn’t portable, you are likely to incur discharge costs and new establishment fees.
- Keep your eye open for package deals If you are looking at taking out a home loan, investigate your eligibility for a professional package (aimed at higher income earners) where you can receive reduced interest rates and, often, no application or other fees, Gold credit cards and home insurance discounts. With an existing loan, look at doing a home loan health check because if your circumstances (e.g. income) have changed since you took it out you might be able to get a better package for your current situation.
For more information contact Richard Windeyer on 1800 01 LOAN or click here to "Book a Meeting"